Question

Jason Manufacturing is preparing its cash budget for the second quarter. The inventory manager has provided...

Jason Manufacturing is preparing its cash budget for the second quarter. The inventory manager has provided the following amounts budgeted for materials purchases:

April $62830
May 45050
June 47400


The controller reports that Jason pays for 20% of its purchases in the month of purchase, 70% in the month following purchase, and 10% in the second month after purchase. What are Jason’s budgeted cash payments for purchases in June?

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Answer #1

The budgeted cash payments for purchase in June included 10% of purchases in April, 70% of purchases in May and 20% of purchases in June month.

10% purchase in April = 62,830 x 10%

10% purchase in April = $ 6,283.

70% purchase in May = 45,050 x 70%

70% purchase in May = $ 31,535

20% purchase in June = 47,400 x 20%

20% purchase in June = $ 9,480

Total = $ 47,298.

Hence, $ 47,298 is the correct answer.

SUMMARY:

The budgeted cash payments in June month is $ 47,298.

Hence, $ 47,298 is the correct answer.

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